Mango Markets settles with SEC, agrees to destroy MNGO tokens

The SEC charged Mango DAO and Blockworks Foundation for unregistered sales of ‘MNGO’ tokens and unregistered broker activity related to the Mango Markets platform.

According to the SEC, Mango DAO, a decentralized autonomous organization, and Blockworks Foundation, a Panama-based organization, raised more than $70 million from the sale of MNGO tokens as of August 2021. The SEC alleged that these organizations bypassed security protections. By avoiding federal registration rules, investors

All accused parties settled the charges by agreeing to destroy their tokens and pay fines.

MNGO tokens served as governance tokens, allowing their holders to have a say in how Mango Markets operated. Mango Markets is a crypto trading platform where users can trade digital assets.

Mango Markets recently allocated $250,000 USD Coin (USDC) to respond to US regulatory scrutiny following a series of regulatory challenges, including the Avraham Eisenberg hack in 2022 that resulted in a loss of $116 million.

Crypto lawyer Bill Hughes suggested in

The Mango token ICO did not require proof that you were not from the US, so US people participated. US individuals also helped launch Mango Markets and received a token allocation for their work. The Mango DAO website was accessible to US persons. Mango Markets was accessed by the USA…

— Bill Hughes: wchughes.eth 🦊 (@BillHughesDC) September 27, 2024

Unregistered brokers

The SEC also accused Blockworks Foundation and Mango Labs LLC of acting as unregistered brokers by claiming that they recruited users to trade on Mango Markets and provided advice and valuations on investment opportunities.

According to the SEC, this activity meant that the entities were operating as brokers without the required regulatory registration.

Similarly, the SEC charged Rari Capital and its co-founders with unregistered brokerage on September 18. They allegedly conducted unregistered securities offerings through investment products with over $1 billion in crypto assets.

In this context, the SEC requires entities that offer securities such as stocks or tokens with investment characteristics to register with them to ensure the protection of investors. This includes complying with strict disclosure rules and other regulations.

Mango Markets is destroying tokens

Mango DAO, Blockworks Foundation, and Mango Labs agreed to resolve the SEC charges without admitting or denying the allegations.

All accused parties agreed to pay a penalty of approximately $700,000, destroy MNGO tokens, and request that these tokens be removed from trading platforms. They also agreed not to solicit trading of MNGO tokens in the future.